Cloud Computing Services Not Taxable in Georgia

Friday, September 12th, 2014

 
 
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Georgia
General

The Georgia Department of Revenue recently released a ruling that a taxpayer's cloud-based services were not subject to tax.

The taxpayer provided cloud-based services that supported its customers' telecommunications equipment. For example, a telecommunications provider would equip a business with telephone lines and telephone service. The business would then need software to instruct the business's telecommunications equipment how to process and route calls on those lines. The taxpayer provided access to its software, installed on servers outside Georgia. The taxpayer operated and maintained the software and hardware; remotely monitored performance; performed necessary adds, moves, changes, and deletions; and provided troubleshooting services. Customers did not receive title or possession of any of the hardware or software. The taxpayer charged customers a monthly fee for its services.

Georgia taxes sales and rentals of tangible personal property. It also taxes sales of some telecommunications services, including local exchange telephone service and cellular telephone services. A company must hold a certificate from the Georgia Public Service Commission to sell telecommunications services.

The Department ruled that the taxpayer's services were not subject to tax. First, the services were not taxable telecommunication services because the taxpayer did not sell phone service to its clients and did not have a certificate from the Georgia Public Service Commission. Its support services for telecommunications equipment were not, by themselves, taxable telecommunications services. Second, the taxpayer did not sell or rent hardware or software because customers did not receive title, possession, use, or control of the hardware or software. The taxpayer owned, operated, maintained, and set up the hardware and software. Customers merely had access to the software installed on the taxpayer's hardware.

https://etax.dor.ga.gov/TaxLawAndPolicy/LetterRulings/SalesAndUse/LR_SUT-2014-05.pdf


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

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